Profit From Further Microsoft Weakness

Use a clever option strategy to make money should the software giant's shares continue to lose value.

Just before Microsoft launched its Surface tablet, we advised readers to go cautious on the stock by selling calls as the shares were rubbing against $30, a level we noted has long provided upside resistance. (See Striking Price Daily, "Getting Realistic About Microsoft," Oct. 29.)

Microsoft's (ticker: MSFT) stock has since fallen to just under $27 on a string of bad news, and the value of the January $31 calls that we...